Ominous Economics
Korea is wary of a Greek default, with the Middle East respiratory syndrome coronavirus (MERS-CoV) continuing to affect its economy.
According to the Korea International Trade Association, the volume of trade between Korea and Greece was US$1.46 billion last year, equivalent to 0.1 percent of Korea’s total trade volume for the same period. The exports from Korea to Greece were US$1.05 billion. Although the bilateral trade volume is rather small, a Greek default can be catastrophic, because its impact is likely to cover the entire Eurozone. With most European financial institutions exposed to the risk, the default can deteriorate both consumer and investor sentiments in Europe as a whole.
Korea’s exports to the E.U. increased 5.7 percent to US$51.66 billion last year, but declined by 17.1 percent during the first five months of this year, when exports accounted for 8.2 percent of total exports from Korea. The Korea Economic Research Institute recently mentioned that a Greek default can decrease Korea’s annual exports to the E.U. by an extra 1.4 percentage points, and the percentage can reach 7.3 percentage points in the event of Grexit.
It is the shipbuilding and shipping industries that are particularly concerned over the possibility. Greece is one of the countries leading the global shipping market, and thus the number of new orders can plummet over time. Companies in the other sectors highly dependent on Europe are closely monitoring the situation as well. Samsung Electronics and LG Electronics are currently selling various products there via their local subsidiaries in Athens.